It's bye buyers as market is rent by Generation X

By Sunanda Creagh and Catharine Munro

THREE decades ago, Denise and Ken Hardy devised a plan for retirement that depended on a rock solid economic premise: the first home buyer.

They bought five acres north-west of Sydney in Kellyville, believing there would always be a stream of young couples wanting to buy a new house on the suburban fringe.

Their land was zoned residential last year and they are ready to cash in. But the buyers have dried up. The urban fringe no longer allows first home buyers to realise the Great Australian Dream. "I just don't understand it. It's all here available, but it's got out of the reach of a developer to do it and make money," Mrs Hardy said.

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The new millennium brought with it the steepest rise in house prices for two decades, according to the Australian Bureau of Statistics.

Its latest report on social trends shows in the 20 years from 1981, the proportion of home owners aged between 25 and 34 dropped seven percentage points.

Couples with families are still the biggest group of mortgage holders. However, Generation X, who are marrying later, have started looking for new ways to spend their money.

The old adage that rent is dead money is losing currency as the next generation of would-be home owners find other things to spend their money on. And they have more than their home-owning counterparts, according to the bureau. Housing costs as a proportion of income have risen for mortgage-owners while they have dropped for renters.

Max Joy and his fiancee Petross Pinatacan have abandoned a plan to buy property on Sydney's North Shore. Instead they invest $2300 a month in super. They are still left with change from the difference between the monthly rent for their three-bedroom house in Wollstonecraft and a monthly mortgage.

"It just works," said American-born Mr Joy, 36. "I would rather save up and get married to my girlfriend than save up and get married to Westpac."

Ms Pinatacan, 30, grew up with the Australian home-ownership dream and still puts up with pressure from friends to buy.

"People say, 'You should buy an investment property! Don't leave it too late!' But it's each to their own. I have friends that have houses and are stuck in traffic for 1½ hours each day getting home. I rent 15 minutes from my work, and we can afford to splurge on dinners and holidays."

Not to mention a harbour view. A house, as Mr Joy sees it, is not something that his life should revolve around.

"If you outgrow your house, you can pick up and move in six months. You don't have to go through the process of trying to sell it every time your life changes slightly," he said.

Serbian-born Ivan Paicav, 27, is another contented renter.

"The European model is there are a lot of happy families that keep renting forever," he said. "I think there's this baby boomer doctrine in Australia that says you have to buy property when you are young and that is a measure of how successful you are."

Mr Paicav and his roommate pay $175 a week each for their Lane Cove unit.

"I might want to own a property eventually, but there's so much for young people to do: to travel overseas, work in England, go see Africa, do an internship at the UN," he said. "If you bog yourself down now with a mortgage you will never get an opportunity to do these things."

Mr Paicav, a conference research manager, would rather invest in shares. "I have given my money to a reputable mutual fund and they help you choose an investment strategy," he said.

Some of those who bought real estate recently have come to regret it.

David Trainer swapped rent for a mortgage, which costs him $150 a week extra, to live in a $240,000 flat in West Ryde.

He now fears he can't afford to have children: "I am far worse off financially than I was renting."

These days he would not be able to afford most new housing further out in Kellyville.

But according to the Urban Development Institute of Australia, most builders can't put anything on the market at the price that first home buyers can afford. That is, less than $350,000.

This contradicts the Planning Minister, Frank Sartor, who declared Sydney had more land to build on than ever before.

Unlike other retiring couples, Mrs Hardy wants her Kellyville vista of paddocks and horses replaced with bricks and mortar. "We always thought in the long term, it would be our super."